Stronger NT dollar affects electronics firms’ profits

Staff writer, with CNA

A stronger New Taiwan dollar has affected the bottom line of the electronics sector, which heavily depends on exports, while many high-tech firms are keeping a close eye on the movement of the currency amid fears of further appreciation, market analysts said on Saturday.

In the third quarter, the NT dollar rose 1.87 percent against the US dollar on the back of fund inflows after major central banks in the world further eased liquidity to boost the economy, which has created spill-over effects on Asia.

During the three-month period, Taiwan’s central bank maintained its efforts to slow down the pace of the Taiwan dollar’s appreciation, analysts said, adding that without the intervention, the local currency could have risen more sharply.

Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, which assembles Apple Inc’s products such as the iPhone and iPad, was one of the victims of the NT dollar’s strength, some analysts said.

In the first nine months of this year, Hon Hai Precision posted NT$2.95 billion (US$101 million) in foreign exchange losses, but in the third quarter alone, the company’s foreign exchange losses reached NT$2.64 billion.

Analysts said that whether Hon Hai’s foreign exchange losses in the fourth quarter will be narrowed down is completely up to the NT dollar’s value, prompting the company to closely monitor the currency’s fluctuations.

Since the end of September, the NT dollar has gained 0.24 percent against the US dollar.

On Nov. 12, the local currency closed at NT$29.090, its highest level in 14 months against the greenback, after the central bank continued its intervention to cap its value.

Analysts said that whenever the NT dollar rises by NT$0.1 against the greenback, Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), one of Taiwan’s leading integrated circuit packaging and test service providers, sees its gross margin go down by 0.1 percentage points.